Whitehall “braced for private schools collapse” 7

[ICouldBeVioletSky]

Continuation of previous threads discussing VAT on independent school fees. The thread title is a headline from a Times article last autumn.

https://www.mumsnet.com/talk/education/5237575-whitehall-braced-for-private-schools-collapse
https://www.mumsnet.com/talk/education/5242586-whitehall-braced-for-private-schools-collapse-2
https://www.mumsnet.com/talk/education/5280646-whitehall-braced-for-private-schools-collapse-3
https://www.mumsnet.com/talk/education/5301690-whitehall-braced-for-private-schools-collapse-4
https://www.mumsnet.com/talk/education/5317397-whitehall-braced-for-private-schools-collapse-5
https://www.mumsnet.com/talk/education/5337850-whitehall-braced-for-private-schools-collapse-6

I also dont know that 7% is a tiny minority.

AI Overview

A "tiny minority" in percentage terms typically refers to a group that constitutes a very small fraction of the overall population, often less than 1% or even significantly smaller. While there isn't a strict numerical threshold, any percentage below 5% is generally considered a small minority, and below 1% is often described as a tiny minority.

What about high attaining pupils with autism and/or ADHD. Where do they fit in? Not all high attaining DC are NT. But to be high attaining is likely to require support to ensure that achievement is in line with ability.

What a load of blather about whether it is a tiny or small minority!

How about a comment on the fairness of the wealthy using private educational psychologists to buy an additional advantage?

There is no debate about whether this happens. It does. I am friendly with two private school heads of SEN and they both say a large part of their job is pushing back on parents trying to get diagnoses for perfectly NT teenagers.

But, if they pay up to £4k for a private diagnosis, you can’t argue with it.

It must be hard for teachers in smaller schools or those closing making redundancies in the private sector

I know the policy gets a lot of support from those who don’t feel at risk re their job on this thread, but still. There’s another one running atm

Other sectors you’d get support if jobs were cut, weird that due to education there’s so little

I have already pointed out that state school employees in all schools currently have their jobs at risk as they buckle under the strain of free breakfast clubs, pay increases and their on-costs, massive increases in energy and water bills, etc, etc. Funnily enough, it’s just as hard for those employees as it is for the private sector employees. If you want wider sympathy for the private sector, you really could also show a bit more concern about what is happening in the state sector and not specify your concern as only being for the private sector, especially when you know the money raised by VAT on private school fees is unlikely to find its way to state school budgets, given the number of other things demanding the Government’s attention. It’s hard otherwise to continue to sympathise with private school parents and schools for also being victims of a cost of living crisis and unstable time in history for the whole population.

Tax is tax - nobody likes it. The Government has broken no laws in taxing school fees. All taxes have a disproportionately negative effect on some people. VAT on school fees obviously costs more for all private school parents, but most private school parents can afford this. The same applies for everything that has VAT slapped on it. Nobody who has to pay it likes VAT, the consequence of VAT is always that some people cannot afford the product or service provided as a result. It’s absolutely shit for those parents who are no longer able to afford school fees, but just as state schools are having to shed staff, cut costs, downsize or close, so do private schools if their money coming in is not as high as the money going out. Yes, of course this is awful.

I don't know whether there is gaming of the system. It's not what I see in DD's school (where significantly fewer than 26.5% of the students get extra time, although perhaps there's time for that to grow).

I'm pretty sure that DD's dyslexia would have been missed in state school. She's a classic case, but she found her own strategies and internalised the resulting stress instead of telling us, as many bright girls do. I'll be forever grateful to the teacher who realised.

Should private schools really be levelling down (so that girls like mine are left to flounder) or should state schools be levelling up, and doing a better job of spotting SEN below crisis level?

Oh and the diagnosis cost nothing like £4k. Several state school parents I know whose children needed a diagnosis also paid for it privately.

Nobody who has to pay it likes VAT, the consequence of VAT is always that some people cannot afford the product or service provided as a result.

Yes, but education is the only VAT-able thing where if that happens, the government then has to pay out an extra £8k per year, to replace what the person was previously paying for themself.

So education is the only VAT-able thing where adding VAT is likely to cost the state money instead of raising it.

So education is the only VAT-able thing where absolutely no-one gains from the painful addition of VAT. Everyone loses.

I do not disagree with that. It’s like the increase in employer NI contributions - it increased the cost of employing people in the public sector aswell as the private sector…

@strawberrybubblegum ,

‘Should private schools really be levelling down (so that girls like mine are left to flounder) or should state schools be levelling up, and doing a better job of spotting SEN below crisis level?’

It’s not levelling down to only diagnose a need when it is there. Generally if several teachers spot it, it is real. If parents are pushing teachers to find it , it is generally false.

‘Oh and the diagnosis cost nothing like £4k. Several state school parents I know whose children needed a diagnosis also paid for it’

It is generally about £1.5k, but when you are the fourth port of call after three rejections, you can up your charges considerably.

Fundamentally, if we are going to have properly funded public services then the average earner needs to make at a bit more in income tax/NI; it simply doesn’t work to fund public services from highly sectoral taxes like this one, which is of course illegal in the EU and which we have never had before in this country.

The last Tory government tried to make the state smaller by taking low earners out of income tax. However it didn’t work because we continued to demand the same level of public services even after the tax base had been eroded - and COVID was the tipping point. Labour then made the understandable but, with hindsight, misguided pledge to not increase income tax or NI. They’ve already broken that pledge in spirit and letter by increasing employers’ NI, and are now scrabbling about for ineffective and/or damaging ways to plug the gap (not just school VAT but also farmers’ inheritance tax and non dom changes). It’s dishonest, economically idiotic, and is blatantly targeted at groups that can be hit while getting applause lines at Labour conference.

Oh pipe down. I pulled you up on your inflammatory language and you come with emotion and a story. Your anecdote proves bollocks all, extrapolation at its worst.

£600 actually. Sure, that's not within reach of all families, but it's hardly private-school-only either.

Whilst we can never really know whether a particular child would have had SEN spotted in the other sector, I think 'under-diagnosis in state' is a far more plausible mechanism for the majority of the difference than 'gaming the system in private'.

Yes to this

Exactly which is why others don’t do it.

It's very true that increasing NI can lead to lower employment, with the government then taking less in income tax and corporation tax and potentially having to pay more unemployment benefit/UC. So it can reduce overall tax take. It's a balance - finding the sweet spot in the Laffer curve.

Education VAT is still very unusual in quite how leveraged the behaviour change impact is.

The VAT policy has also been very unusual in how far they've pushed it along the Laffer curve in one go. 20% of the entire end cost!! That already seems to have reduced participation by 1.9% in the last year - despite the 'stickiness' of school education.(previous discussion on variability of private school participation notwithstanding)

The NI change was a 1.2% increase and reduced threshold - so the biggest percentage impact will be for employees earning £9000 (the old threshold) who will cost an extra 6.5% in tax. For an average £35k salary, the NI change has increased the cost of employing someone by 2.6% (due to the threshold change as well as % increase)

Anecdotally, people are saying that has made a difference to hiring levels, but it's not clear yet. For numbers, what I found is that: in February to April 2025, the estimated UK employment rate increased 0.1 percentage points to 75.1%, the UK unemployment rate increased 0.2 percentage points to 4.6%, and the UK economic inactivity rate decreased 0.2 percentage points to 21.3% compared with November 2024 to January 2025. So not really showing high enough levels of change to affect tax take from the NI rise yet - although it will take a while to feed through.

It would be interesting to see a breakdown of employment changes by salary over the next year, to see whether there are job losses at lower salaries (where the proportional cost increase is more). That could easily change the profitability of the NI change - since low income workers are much, much more likely to get UC if they lose their jobs, which increases the cost to the government. Eg if the 0.2 increase in unemployment is for low earners who will have the income replaced through UC... but the 0.2 increase in workforce participation is actually people increasing hours/SAHM re-entering the workforce due to COL pressure (who didn't get UC), that may still reduce the net tax take - even though the employment numbers balance.

I do suspect that if NI had increased by 15-20% (equivalent to the education VAT), it may have changed more noticeably already - as private school participation did. Although of course, the Laffer curve varies for each tax and each product.

I can't imagine them making a NI jump that big in one go though! It would rightly be condemned as reckless.

We only have two VAT rates though - 20% for practically everything, 5% for reduced rate like car seats and electricity. I don’t think there’s a precedent for introducing VAT at 5% then stepping up to 20% - something is either VAT rated, reduced VAT rated or zero rated.

Sanpro was 5% for a long time because EU rules required we put VAT on it, then it moved to zero rated.

commonslibrary.parliament.uk/research-briefings/sn01128/

They could easily have started at 5%, then looked at the behaviour change over a couple of years and decided whether to change it to 20%

That would have significantly reduced the harm for children at the cusp of affordability, especially those in exam years.

But Labour always knew this wasn't a sustainable money-earner and wanted to maximise the tax-take whilst people were effectively locked in. Shame on them.

@strawberrybubblegum Again, I don’t know that they could. I am not sure what characteristics of a product/service allow it to be deemed as reduced rate rather than default rate. But I think it would be far more likely that a legal challenge would be successful to an increase in rate, if nothing about the underlying service had changed.

It isn’t like IHT or NI or PAYE where the government has a lot of precise control over exact thresholds and percentages.

ETA reduced rate VAT is intended for essential goods and services eg car seats and mobility aids- it would be rather a nonsense for Labour to put private schooling into this bucket.

Glad to see posts look at behaviour change in here. Rare to see the perspective. Not even Labour get it to their, and our, cost.

During covid the government reduced VAT rates for hospitality, accommodation and even attraction industries to help stimulate the economy and support those industries.

It was cut to 5% on 15th July 2020 until 30th September 2021, and then the government introduced a new reduced rate of VAT of 12.5% until the 31st of March 2022. After that deadline, all companies in the affected industries went back to paying the standard 20% of VAT.

Doing similar for education was easily possible. I remember speculation that they might. It was an active choice not to.

*An active choice to hit private schools as hard as they possibly could.

See also the active choice to introduce VAT in January - just 2 months after the budget.

Despite being warned that would cause significantly more harm to the children than if they waited until September for it to apply (as they initially said they would).

And in sickening contrast to the 2 years they gave the vaping industry to adapt and prepare.

I guess vaping is more essential to "us" than private education?